Ms. DeLauro (for
herself, Mr. Conyers,
Mr. Jackson of Illinois,
Ms. Richardson,
Ms. Norton,
Mr. Gutierrez, and
Mr. Cicilline) introduced the
following bill; which was referred to the Committee on Ways and Means

A BILL

To provide for the treatment and temporary financing of
short-time compensation programs.

1.

Short title; table of
contents

(a)

Short
title

This Act may be cited
as the Layoff Prevention Act of
2011.

(b)

Table of
contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Treatment of short-time compensation
programs.

Sec. 3. Temporary financing of short-time compensation payments
in States with programs in law.

Sec. 4. Temporary financing of short-time compensation
agreements.

Sec. 5. Grants for short-time compensation
programs.

Sec. 6. Assistance and guidance in implementing
programs.

Sec. 7. Reports.

2.

Treatment of
short-time compensation programs

(a)

Definition

(1)

In
general

Section 3306 of the Internal Revenue Code of 1986 (26
U.S.C. 3306) is amended by adding at the end the following new
subsection:

(v)

Short-Time
compensation program

For purposes of this chapter, the term
short-time compensation program means a program under
which—

(1)

the participation
of an employer is voluntary;

(2)

an employer
reduces the number of hours worked by employees in lieu of layoffs;

(3)

such employees
whose workweeks have been reduced by at least 10 percent, and by not more than
the percentage, if any, that is determined by the State to be appropriate (but
in no case more than 60 percent), are eligible for unemployment
compensation;

(4)

the amount of
unemployment compensation payable to any such employee is a pro rata portion of
the unemployment compensation which would otherwise be payable to the employee
if such employee were totally unemployed;

(5)

such employees are
not expected to meet the availability for work or work search test requirements
while collecting short-time compensation benefits, but are required to be
available for their normal workweek;

(6)

eligible employees
may participate, as appropriate, in training (including employer-sponsored
training or worker training funded under the Workforce Investment Act of 1998)
to enhance job skills if such program has been approved by the State
agency;

(7)

the State agency
shall require employers to certify that the employer will continue to provide
health benefits and retirement benefits under a defined benefit plan (as
defined in section 414(j)) and contributions under a defined contribution plan
(as defined in section 414(i)) to any employee whose workweek is reduced under
the program under the same terms and conditions as though the workweek of such
employee had not been reduced;

(8)

the State agency
shall require an employer to submit a written plan describing the manner in
which the requirements of this subsection will be implemented (including a plan
for giving advance notice, where feasible, to an employee whose workweek is to
be reduced) together with an estimate of the number of layoffs that would have
occurred absent the ability to participate in short-time compensation and such
other information as the Secretary of Labor determines is appropriate;

(9)

in the case of
employees represented by a union, the appropriate official of the union has
agreed to the terms of the employer’s written plan and implementation is
consistent with employer obligations under the applicable Federal laws;
and

(10)

upon request by
the State and approval by the Secretary of Labor, only such other provisions
are included in the State law that are determined to be appropriate for
purposes of a short-time compensation
program.

.

(2)

Effective
date

Subject to paragraph (3), the amendment made by paragraph
(1) shall take effect on the date of the enactment of this Act.

(3)

Transition
period for existing programs

In the case of a State that is
administering a short-time compensation program as of the date of the enactment
of this Act and the State law cannot be administered consistent with the
amendment made by paragraph (1), such amendment shall take effect on the
earlier of—

(A)

the date the State
changes its State law in order to be consistent with such amendment; or

(B)

the date that is 2
years and 6 months after the date of the enactment of this Act.

(b)

Conforming
amendments

(1)

Internal Revenue
Code of 1986

(A)

Subparagraph (E)
of section 3304(a)(4) of the Internal Revenue Code of 1986 is amended to read
as follows:

(E)

amounts may be
withdrawn for the payment of short-time compensation under a short-time
compensation program (as defined under section
3306(v));

.

(B)

Subsection (f) of
section 3306 of the Internal Revenue Code of 1986 is amended—

(i)

by
striking paragraph (5) (relating to short-time compensation) and inserting the
following new paragraph:

(5)

amounts may be
withdrawn for the payment of short-time compensation under a short-time
compensation program (as defined in subsection (v));
and

Section 303(a)(5) of the Social Security Act is amended by
striking the payment of short-time compensation under a plan approved by
the Secretary of Labor and inserting the payment of short-time
compensation under a short-time compensation program (as defined in section
3306(v) of the Internal Revenue Code of 1986).

(3)

Unemployment
Compensation Amendments of 1992

Subsections (b) through (d) of
section 401 of the Unemployment Compensation Amendments of 1992 (26 U.S.C. 3304
note) are repealed.

3.

Temporary
financing of short-time compensation payments in States with programs in
law

(a)

Payments to
States

(1)

In
general

Subject to paragraph (3), there shall be paid to a State
an amount equal to 100 percent of the amount of short-time compensation paid
under a short-time compensation program (as defined in section 3306(v) of the
Internal Revenue Code of 1986, as added by section 2(a)) under the provisions
of the State law.

(2)

Terms of
payments

Payments made to a State under paragraph (1) shall be
payable by way of reimbursement in such amounts as the Secretary estimates the
State will be entitled to receive under this section for each calendar month,
reduced or increased, as the case may be, by any amount by which the Secretary
finds that the Secretary's estimates for any prior calendar month were greater
or less than the amounts which should have been paid to the State. Such
estimates may be made on the basis of such statistical, sampling, or other
method as may be agreed upon by the Secretary and the State agency of the State
involved.

(3)

Limitations on
payments

(A)

General payment
limitations

No payments shall be made to a State under this
section for short-time compensation paid to an individual by the State during a
benefit year in excess of 26 times the amount of regular compensation
(including dependents’ allowances) under the State law payable to such
individual for a week of total unemployment.

(B)

Employer
limitations

No payments shall be made to a State under this
section for benefits paid to an individual by the State under a short-time
compensation program if such individual is employed by an employer on a
seasonal, temporary, or intermittent basis.

(b)

Applicability

(1)

In
general

Payments to a State under subsection (a) shall be
available for weeks of unemployment—

(A)

beginning on or
after the date of the enactment of this Act; and

(B)

ending on or
before the date that is 3 years and 6 months after the date of the enactment of
this Act.

(2)

Three-year
funding limitation for combined payments under this section and section
4

States may receive payments under this section and section 4
with respect to a total of not more than 156 weeks.

(c)

Two-Year
transition period for existing programs

During any period that
the transition provision under section 2(a)(3) is applicable to a State with
respect to a short-time compensation program, such State shall be eligible for
payments under this section. Subject to paragraphs (1)(B) and (2) of subsection
(b), if at any point after the date of the enactment of this Act the State
enacts a State law providing for the payment of short-time compensation under a
short-time compensation program that meets the definition of such a program
under section 3306(v) of the Internal Revenue Code of 1986, as added by section
2(a), the State shall be eligible for payments under this section after the
effective date of such enactment.

(d)

Funding and
certifications

(1)

Funding

There
are appropriated, out of moneys in the Treasury not otherwise appropriated,
such sums as may be necessary for purposes of carrying out this section.

(2)

Certifications

The
Secretary shall from time to time certify to the Secretary of the Treasury for
payment to each State the sums payable to such State under this section.

(e)

Definitions

In
this section:

(1)

Secretary

The
term Secretary means the Secretary of Labor.

(2)

State; State
agency; State law

The terms State, State
agency, and State law have the meanings given those
terms in section 205 of the Federal-State Extended Unemployment Compensation
Act of 1970 (26 U.S.C. 3304 note).

4.

Temporary
financing of short-time compensation agreements

(a)

Federal-State
agreements

(1)

In
general

Any State which desires to do so may enter into, and
participate in, an agreement under this section with the Secretary provided
that such State's law does not provide for the payment of short-time
compensation under a short-time compensation program (as defined in section
3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)).

(2)

Ability to
terminate

Any State which is a party to an agreement under this
section may, upon providing 30 days’ written notice to the Secretary, terminate
such agreement.

(b)

Provisions of
Federal-State agreement

(1)

In
general

Any agreement under this section shall provide that the
State agency of the State will make payments of short-time compensation under a
plan approved by the State. Such plan shall provide that payments are made in
accordance with the requirements under section 3306(v) of the Internal Revenue
Code of 1986, as added by section 2(a).

(2)

Limitations on
plans

(A)

General payment
limitations

A short-time compensation plan approved by a State
shall not permit the payment of short-time compensation to an individual by the
State during a benefit year in excess of 26 times the amount of regular
compensation (including dependents’ allowances) under the State law payable to
such individual for a week of total unemployment.

(B)

Employer
limitations

A short-time compensation plan approved by a State
shall not provide payments to an individual if such individual is employed by
an employer on a seasonal, temporary, or intermittent basis.

(3)

Employer payment
of costs

Any short-time compensation plan entered into by an
employer must provide that the employer will pay the State an amount equal to
one-half of the amount of short-time compensation paid under such plan. Such
amount shall be deposited in the State’s unemployment fund and shall not be
used for purposes of calculating an employer’s contribution rate under section
3303(a)(1) of the Internal Revenue Code of 1986.

(c)

Payments to
States

(1)

In
general

There shall be paid to each State with an agreement under
this section an amount equal to—

(A)

one-half of the
amount of short-time compensation paid to individuals by the State pursuant to
such agreement; and

(B)

any additional
administrative expenses incurred by the State by reason of such agreement (as
determined by the Secretary).

(2)

Terms of
payments

Payments made to a State under paragraph (1) shall be
payable by way of reimbursement in such amounts as the Secretary estimates the
State will be entitled to receive under this section for each calendar month,
reduced or increased, as the case may be, by any amount by which the Secretary
finds that the Secretary's estimates for any prior calendar month were greater
or less than the amounts which should have been paid to the State. Such
estimates may be made on the basis of such statistical, sampling, or other
method as may be agreed upon by the Secretary and the State agency of the State
involved.

(3)

Funding

There
are appropriated, out of moneys in the Treasury not otherwise appropriated,
such sums as may be necessary for purposes of carrying out this section.

(4)

Certifications

The
Secretary shall from time to time certify to the Secretary of the Treasury for
payment to each State the sums payable to such State under this section.

(d)

Applicability

(1)

In
general

An agreement entered into under this section shall apply
to weeks of unemployment—

(A)

beginning on or
after the date on which such agreement is entered into; and

(B)

ending on or
before the date that is 2 years and 13 weeks after the date of the enactment of
this Act.

(2)

Two-year funding
limitation

States may receive payments under this section with
respect to a total of not more than 104 weeks.

(e)

Special
rule

If a State has entered into an agreement under this section
and subsequently enacts a State law providing for the payment of short-time
compensation under a short-time compensation program that meets the definition
of such a program under section 3306(v) of the Internal Revenue Code of 1986,
as added by section 2(a), the State—

(1)

shall not be
eligible for payments under this section for weeks of unemployment beginning
after the effective date of such State law; and

(2)

subject to
paragraphs (1)(B) and (2) of section 3(b), shall be eligible to receive
payments under section 3 after the effective date of such State law.

(f)

Definitions

In
this section:

(1)

Secretary

The
term Secretary means the Secretary of Labor.

(2)

State; State
agency; State law

The terms State, State
agency, and State law have the meanings given those
terms in section 205 of the Federal-State Extended Unemployment Compensation
Act of 1970 (26 U.S.C. 3304 note).

5.

Grants for
short-time compensation programs

(a)

Grants

(1)

For
implementation or improved administration

The Secretary shall
award grants to States that enact short-time compensation programs (as defined
in subsection (i)(2)) for the purpose of implementation or improved
administration of such programs.

(2)

For promotion
and enrollment

The Secretary shall award grants to States that
are eligible and submit plans for a grant under paragraph (1) for such States
to promote and enroll employers in short-time compensation programs (as so
defined).

(3)

Eligibility

(A)

In
general

The Secretary shall determine eligibility criteria for
the grants under paragraph (1) and (2).

(B)

Clarification

A
State administering a short-time compensation program, including a program
being administered by a State that is participating in the transition under the
provisions of sections 2(a)(3) and 3(c), that does not meet the definition of a
short-time compensation program under section 3306(v) of the Internal Revenue
Code of 1986 (as added by 2(a)), and a State with an agreement under section 4,
shall not be eligible to receive a grant under this section until such time as
the State law of the State provides for payments under a short-time
compensation program that meets such definition and such law.

(b)

Amount of
grants

(1)

In
general

The maximum amount available for making grants to a State
under paragraphs (1) and (2) shall be equal to the amount obtained by
multiplying $700,000,000 (less the amount used by the Secretary under
subsection (e)) by the same ratio as would apply under subsection (a)(2)(B) of
section 903 of the Social Security Act (42 U.S.C. 1103) for purposes of
determining such State's share of any excess amount (as described in subsection
(a)(1) of such section) that would have been subject to transfer to State
accounts, as of October 1, 2010, under the provisions of subsection (a) of such
section.

(2)

Amount available
for different grants

Of the maximum incentive payment determined
under paragraph (1) with respect to a State—

(A)

one-third shall be
available for a grant under subsection (a)(1); and

(B)

two-thirds shall
be available for a grant under subsection (a)(2).

(c)

Grant
application and disbursal

(1)

Application

Any
State seeking a grant under paragraph (1) or (2) of subsection (a) shall submit
an application to the Secretary at such time, in such manner, and complete with
such information as the Secretary may require. In no case may the Secretary
award a grant under this section with respect to an application that is
submitted after December 31, 2014.

(2)

Notice

The
Secretary shall, within 30 days after receiving a complete application, notify
the State agency of the State of the Secretary's findings with respect to the
requirements for a grant under paragraph (1) or (2) (or both) of subsection
(a).

(3)

Certification

If
the Secretary finds that the State law provisions meet the requirements for a
grant under subsection (a), the Secretary shall thereupon make a certification
to that effect to the Secretary of the Treasury, together with a certification
as to the amount of the grant payment to be transferred to the State account in
the Unemployment Trust Fund (as established in section 904(a) of the Social
Security Act (42 U.S.C. 1104(a))) pursuant to that finding. The Secretary of
the Treasury shall make the appropriate transfer to the State account within 7
days after receiving such certification.

(4)

Requirement

No
certification of compliance with the requirements for a grant under paragraph
(1) or (2) of subsection (a) may be made with respect to any State
whose—

(A)

State law is not
otherwise eligible for certification under section 303 of the Social Security
Act (42 U.S.C. 503) or approvable under section 3304 of the Internal Revenue
Code of 1986; or

(B)

short-time
compensation program is subject to discontinuation or is not scheduled to take
effect within 12 months of the certification.

(d)

Use of
funds

The amount of any grant awarded under this section shall be
used for the implementation of short-time compensation programs and the overall
administration of such programs and the promotion and enrollment efforts
associated with such programs, such as through—

(1)

the creation or
support of rapid response teams to advise employers about alternatives to
layoffs;

(2)

the provision of
education or assistance to employers to enable them to assess the feasibility
of participating in short-time compensation programs; and

(3)

the development or
enhancement of systems to automate—

(A)

the submission and
approval of plans; and

(B)

the filing and
approval of new and ongoing short-time compensation claims.

(e)

Administration

The
Secretary is authorized to use 0.25 percent of the funds available under
subsection (g) to provide for outreach and to share best practices with respect
to this section and short-time compensation programs.

(f)

Recoupment

The
Secretary shall establish a process under which the Secretary shall recoup the
amount of any grant awarded under paragraph (1) or (2) of subsection (a) if the
Secretary determines that, during the 5-year period beginning on the first date
that any such grant is awarded to the State, the State—

(1)

terminated the
State's short-time compensation program; or

(2)

failed to meet
appropriate requirements with respect to such program (as established by the
Secretary).

(g)

Funding

There
are appropriated, out of moneys in the Treasury not otherwise appropriated, to
the Secretary, $700,000,000 to carry out this section, to remain available
without fiscal year limitation.

(h)

Reporting

The
Secretary may establish reporting requirements for States receiving a grant
under this section in order to provide oversight of grant funds.

(i)

Definitions

In
this section:

(1)

Secretary

The
term Secretary means the Secretary of Labor.

(2)

Short-time
compensation program

The term short-time compensation
program has the meaning given such term in section 3306(v) of the
Internal Revenue Code of 1986, as added by section 2(a).

(3)

State; State
agency; State law

The terms State, State
agency, and State law have the meanings given those
terms in section 205 of the Federal-State Extended Unemployment Compensation
Act of 1970 (26 U.S.C. 3304 note).

6.

Assistance and
guidance in implementing programs

(a)

In
general

In order to assist
States in establishing, qualifying, and implementing short-time compensation
programs (as defined in section 3306(v) of the Internal Revenue Code of 1986,
as added by section 2(a)), the Secretary of Labor (in this section referred to
as the Secretary) shall—

(1)

develop model
legislative language which may be used by States in developing and enacting
such programs and periodically review and revise such model legislative
language;

(2)

provide technical
assistance and guidance in developing, enacting, and implementing such
programs;

(3)

establish
reporting requirements for States, including reporting on—

(A)

the number of
estimated averted layoffs;

(B)

the number of
participating employers and workers; and

(C)

such other items
as the Secretary of Labor determines are appropriate.

(b)

Model language
and guidance

The model language and guidance developed under
subsection (a) shall allow sufficient flexibility by States and participating
employers while ensuring accountability and program integrity.

(c)

Consultation

In
developing the model legislative language and guidance under subsection (a),
and in order to meet the requirements of subsection (b), the Secretary shall
consult with employers, labor organizations, State workforce agencies, and
other program experts.”

7.

Reports

(a)

Initial
report

(1)

In
general

Not later than 4 years after the date of the enactment of
this Act, the Secretary of Labor shall submit to Congress and to the President
a report or reports on the implementation of the provisions of this Act.

(2)

Requirements

Any
report under paragraph (1) shall include the following:

(A)

A description of
best practices by States and employers in the administration, promotion, and
use of short-time compensation programs (as defined in section 3306(v) of the
Internal Revenue Code of 1986, as added by section 2(a)).

(B)

An analysis of the
significant challenges to State enactment and implementation of short-time
compensation programs.

(C)

A survey of
employers in States that have not enacted a short-time compensation program or
entered into an agreement with the Secretary on a short-time compensation plan
to determine the level of interest among such employers in participating in
short-time compensation programs.

(D)

Other matters
related to the implementation of the provisions of this Act as the Secretary of
Labor determines appropriate.

(b)

Subsequent
reports

After the submission of the report under subsection (a),
the Secretary of Labor may submit such additional reports on the implementation
of short-time compensation programs as the Secretary deems appropriate.

(c)

Funding

There
are appropriated, out of any moneys in the Treasury not otherwise appropriated,
to the Secretary of Labor, $1,500,000 to carry out this section, to remain
available without fiscal year limitation.